Moates Corporation has provided the following data concerning an investment project that it is considering:Initial investmentAnnual cash flow$310,000$137,000 per yearExpected life of the projectDiscount rate4 years11%Click here to view Exhibit 120-1 and Exhibit 120-2, to determine the appropriate discount factor(s) using the tables provided.The net present value of the project is closest to:Multiple Choice$310,000$115,111$(173.000)

Calculation of Net Present Value =(Annual cash flow x discounting factor) - Initial investment =…

Answered: sh flow $137,000 per year 4 years ife…

sh flow $137,000 per year 4 years ife of the project rate ew Exhibit 120-1 and Exhibit 128-2, to determine the appropriate discount factor(s) un t value of the project is closest to: molce

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

Moates Corporation has provided the following data concerning an investment project that it is considering:
Initial investment
Annual cash flow
$310,000
$137,000 per year
Expected life of the project
Discount rate
4 years
11%
Click here to view Exhibit 120-1 and Exhibit 120-2, to determine the appropriate discount factor(s) using the tables provided.
The net present value of the project is closest to:
Multiple Choice
$310,000
$115,111
$(173.000)

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